Economics and Me

[This is the icebreaker speech I gave tonight to the UAB Toastmasters.]
Economics is a way of making sense of life. It’s how I make sense of my life, anyway. Mine, and that of everyone I meet and think about and read about. It’s the story of my life.

I lost my innocence about the world when I discovered the law of unintended consequences, the law of the seen and the unseen, the laws of demand and supply. 
 
The journey started with such unsavory things as politics and the Republican Party. First came the long walks with my dad. I learned about taxes, drug policy, Social Security, and foreign interventionism.
And I studied on my own. I learned the history of the debate about whether socialism can work in principle and in practice. I learned how people make decisions on the margin.  I learned from the Mises Institute, among other sources.
 
I returned to school — Auburn University —after a long hiatus. And I thought I’d try psychology. Why psychology? Why not economics?
 
Because people’s subjective understanding of the context in which they make their decisions is guided by principles of which they might not be aware, and if you can understand what they understand, as well as those principles, you can make sense of the bigger social patterns — price formation, norms, rules. 
To illustrate: Julian Simon wrote a wonderful book Good Mood many years ago. He had suffered from debilitating depression for decades and conducted an independent and brave and relentless search for a way out. What he came upon was an economic approach to therapy, a form of cognitive-behavioral therapy. 
 
He said: Depressives value their way of living more than their alternatives. They reason that the benefits — including a comfortable pattern of thinking and living — outweigh the costs, in case after case. And they can help themselves by comparing their false expectations to a more considered alternative.
 
That’s an example of the connection between psychology and economics. But it wasn’t right for me. So I switched to what I loved: economics.
When I started studying economics formally in school, I took to it readily, even though it was not “Austrian” economics that I learned. I had been familiar through my independent studies with economics as it had developed in Vienna. In school, we didn’t emphasize the entrepreneur as the agent of change, as they did in Vienna. But good economics is good, whether or not it comes from Vienna.  And I learned more of it in school.
 
On graduating Auburn, I had no clear idea what I wanted to do with my life, nor what my training in economics had prepared me for. I took the easy route — it meant I didn’t have to do much soul searching — and prepared for grad school. George Mason University was on my map because I knew many fascinating students with connections to it. 
Grad school was exciting.  I explored fiscal institutions, monetary politics, political entrepreneurship. It was fun. I met brilliant scholars and passionate students.  But, again, it wasn’t for me. I had to do something where I would make some progress and feel more at home, regardless of whether in some other life academic research would have been for me.
My next step was to try ways of doing economic research outside of academia. I interned at the Tax Foundation. I studied film-production tax incentives. I interned at the Institute for Humane Studies, where I wrote lots and lots of little summaries of scholars’ research.
Still, while research and writing was satisfying, I dragged my feet in looking for opportunities to do more of it. I got in touch with contacts from when I did indexing and proofreading as an undergrad.
 
It’s always been so much easier working with others’ writing than with making my own. They set the boundaries of what they want to say; and all I have to do is make sure they say what they want to say. 
So now here I am. I’m working with several clients and always looking for more opportunities in publishing services. I’ve indexed, proofread, transcribed, copy edited, written, and researched. 
I love economics, and I love editing, and I hope to do both in the years ahead. It just makes sense.
 
Thank you all for listening, and thank you, Mr. Toastmaster.
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Market-Process Market Skeptics

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Selections from Albert Jay Nock, Journals of These Days and Journals of Forgotten Days

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Lionel Robbins’s Plea To a Protectionist

I do not hope to persuade Mr. Wise to go back to Hume and Bentham. But may I appeal to him as a good internationalist forthwith to return to Karl Marx?

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Introducing Milton Friedman

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Orison Swett Marden wrote some vivid and insightful advice in his aptly named book The Joys of Living. At risk of portraying the book as a collection of adages, and worse, trite adages, here is a sample of some of the more poetic passages, shorn of most context. 

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Two Scribblers on Social Change

Madmen, Intellectuals, and Academic Scribblers – The Book Forum

Ideas, unless outward circumstances conspire with them, have in general no very rapid or immediate efficacy in human affairs; and the most favorable outward circumstances may pass by, or remain inoperative, for want of ideas suitable to the conjuncture. But when the right circumstances and the right ideas meet, the effect is seldom slow in manifesting itself” — J.S. Mill

On January 17 at the Cato Institute, Edward Lopez and Wayne Leighton presented the argument from their new book that it is when madmen in authority, academic scribblers, and intellectuals recognize circumstances favorable to the ideas that they market, that policy changes, for good or for bad, by evolution or by revolution. While an economist who sees politics without romance at first expects that bad law can only get worse, economists with romance see that when entrepreneurs sell good ideas to the right people at the right time, government is forced to play by better rules.  

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The Muddled, Puzzled, Brilliant Mind

What we think of as behavioral disabilities can be seen as part of a cognitive profile of strengths and weaknesses that make individuals  sometimes more, sometimes less well-adapted to the social world than individuals with a “normal” cognitive profile (if such a thing exists at all).

Tyler Cowen made this case for autism, and something Hayek said leads me to think that the case can be made for a certain type of mind that he characterized himself, and others, as having, and to which he attributed his and these others’ contributions to scholarly knowledge: the mind of “the puzzler,” or what he says might equally well be viewed as “the muddler.”

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The Chocolate Enchilada

Henry didn’t think it was a big deal but Al and Ivan insisted it was. “Who thinks of putting chocolate sauce, peanut-butter-coated sprinkles, Sriracha sauce, and marshmallow sauce on a tortilla and creating a delicious, ‘traditional,’ American-Mexican dessert?” Ivan wanted to know. “Not just anyone.”

"And remember that time Henry was running for class president, and instead of giving a speech he showed off by swallowing the mouthpiece of his tuba at the podium?", Al chimed in. "Not just anyone thinks of doing that."

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Please Don’t Be Less Productive!

Tim Jackson is wrong. Jackson, professor of sustainable development, wrote an article in the NYT calling for people to be less productive: we can get more of the things in the unproductive sectors, like teaching and healthcare; we can avoid unemployment; and we can feel satisfied doing meaningful work. Unfortunately, Jackson’s logic is pretty bad. Here’s why.

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The Emergence of Political Central Banking

Can central banks be simultaneously empowered in an effort to control monetary and financial crises and constrained against abusing its powers?

A common answer is that it can be if subjected to constitutional checks and balances: e.g., the gold standard, in various forms, as a device to limit the central bank’s ability to expand the money supply; legislated mandates on the central bank’s goals and policy instruments, such as a mandate to stabilize nominal GDP; legislated restrictions, such as a prohibition on the central bank’s authority to purchase bonds directly from the fiscal authority.

But although we have seen these constitutional constraints in place in numerous times and places, a tamed or tethered* central bank has always been an elusive creature. 

Political economy has pointed sporadically and sometimes persuasively to mechanisms to explain why these constraints fail. These mechanisms attempt to explain the emergence of political, centralized, expansionary central banking.

But these mechanisms do not seem to fully explain why the constraints did not fail at the start, or how political agents succeeded in evading the constraints.

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The Death of a Wheat Board

Canada’s lawmakers signed legislation to abolish the Wheat Board several months ago. The legislation took effect at the beginning of this month (August).

The Board had a monopsony on wheat sales, presenting itself as the only option for  wheat farmers to sell through. It arose during the Depression era as a vehicle for raising the price of wheat.

 What led to the liberalization?* It is runs contrary to the economist’s usual prediction that regulation gets more entrenched as long as the regulated businesses have a strong influence on the regulators. More specifically, in the case of agriculture, the economist Bruce Benson once argued that the reason supply management agricultural policies in Canada were more extensive in Canada than in the United States was that farmers in Canada had a lower cost of organizing and exercising political influence; so they received a higher per-capita transfer of wealth.   

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Ninja Arbitrage

A friend does well for himself by doing good for society — but he tends to think his work harms society. Society would be worse off if faulty economic analysis eroded my friend’s self-respect and led him to abstain from his line of work out of a misplaced concern for the welfare of society. 

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Breaking the Italians’ Shopkeeping Cartel

A law that restricts the hours a business can stay open makes it possible for the owners to work less but make the same money. They don’t have to fear that customers will go anywhere else. Customers suffer inconvenience, though, and entrepreneurs who would gladly work at inconvenient hours also lose.

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Merkel to Sarkozy: ‘Please accept this teddy bear’

The WSJ reports that Angela Merkel took a measure to turn conflict with France’s PM, Nicholas Sarkozy, into a more cooperative relationship (if perhaps only a marginal change):She gave Sarkozy’s wife a teddy bear in congratulations for her new baby.

The article (link above), about conflict between European leaders, is fascinating throughout.

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